Weekly Market Insights | Market Slips as Q1 Reports Arrive

U.S. stocks slipped over the shortened trading week as Q1 corporate reports started to roll in. Tariff angst continues to influence the markets which need good news and deals to be finalized on the tariff front, especially from key US trading partners. The Standard & Poor’s 500 Index dropped 1.50 percent, while the Nasdaq Composite Index fell 2.62 percent. The Dow Jones Industrial Average lost 2.66 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, added 4.19 percent.^1,2

U.S. Stocks Slide

Stocks started the four-day week with modest gains. Trade volatility subsided as several money center banks reported Q1 numbers at or above expectations.³ Stocks trended lower midweek after Federal Reserve Chair Jerome Powell expressed concern that tariffs would likely “move us further away from our goals”—including keeping inflation in check.⁴

Stocks were mixed on the week's last trading day as traders evaluated White House news that trade deals were progressing with Japan, China, and the European Union. The S&P 500 ended the day higher, but the Dow Industrials were under pressure after a large healthcare company gave a disappointing Q1 report.⁵

The Fed’s Influence

Stocks were under pressure following comments from Fed Chair Powell, who expressed concern about the ability of the Fed to balance its inflation and employment goals given the current trade situation. He said, “Tariffs are highly likely to generate at least a temporary rise in inflation,” and “the inflationary effects could be more persistent.”⁶

Unfortunately, the Fed has been late with good policy and wrong in their approach and timing and this applies to current and some prior Fed officials. Inflation was NOT transitory and the economy had already weakened coming into 2025. Other Central banks have been reducing interest rates with the European Central Bank cutting its main rate by a quarter point on Thursday, the seventh cut in the past year. Wake up Jerome! 

GOLD AND BITCOIN

Bitcoin is acting like a proxy for risk-on assets and also being pitched as neutral reserve asset that nobody can control or manipulate which is perceived to be gold, but gold does not work in the information age. Perhaps a digital currency backed by gold is the solution which is what China has been working on developing with their secret stockpiling of gold that has been going on for quite some time. While bitcoin has outperformed the stock market - up 3% in the past month compared with the Nasdaq's near 6.5% drop - institutional investors are piling into gold, the battle-tested safe haven of the ages. 

The surge in gold prices can be attributed to several factors:

1.    Geopolitical tensions: Escalating conflicts, such as the war in Ukraine and conflicts with Israel, have heightened demand for gold as a safe-haven asset. 
2.    Monetary policy expectations: Ongoing interest rate cuts by the European Central Bank and a hawkish stance from the U.S. Federal Reserve have influenced investor sentiment, impacting gold prices. 
3.    Market volatility: Fluctuations in the stock market and concerns over inflation have driven investors toward gold as a store of value in uncertain times. 

The precious yellow metal is up 12% over the last month and about 26.4% YTD to around $3,368 a troy ounce. The case for adding gold allocations to portfolios has become more compelling than ever in this environment of escalating tariff uncertainty, weaker growth, higher inflation, geopolitical risks & diversification away from US assets and the US dollar. 
Gold fund flows have hit $80 billion so far this year, while data shows spot bitcoin ETFs saw $5.25 billion net inflows in January.  But month-to-date, over $900 million left Bitcoin funds, after February and March saw $3.56 billion and $767 billion of net outflows in crypto, so once again gold is king with regard to being an inflation hedge and store of value. 

OIL (black gold) – Prices enjoyed a mild rebound this past week, but OPEC’s monthly industry report showed a downward revision to 2025 demand expectations, which was more noteworthy considering the recent decision to raise the group’s collective oil output targets by more than anticipated.
Partner with a Certified Financial Fiduciary at Castle Financial 

In these volatile and uncertain times, the biggest value of working with a seasoned advisor, acting as a fiduciary, is having someone to help control emotions and not get caught up in making bad investment decisions. Let's face it, when times are turbulent, emotions will often trump logic, leading to devastating financial decisions. 

Email julie@castlefinancial.com or call us at 732-888-4994 to schedule a complimentary 30 minute consultation and second opinion if you are not already a valued client of Castle Financial.

This Week: Key Economic Data

Monday: Leading Economic Indicators.

Tuesday: Philadelphia Fed President Harker speaks.

Wednesday: Chicago Fed President Austan Goolsbee, St. Louis Fed President Alberto Musalem, Atlanta Fed President Bostic, and Fed Governor Christopher Waller speak. PMI Services. PMI Manufacturing. New Home Sales. Fed Beige Book.

Thursday: Durable Goods. Weekly Jobless Claims.

Friday: Consumer Sentiment (final).

^{Source: Investors Business Daily - Econoday economic calendar; April 17, 2025
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday: Tesla, Inc. (TSLA), GE Aerospace (GE), Verizon Communications Inc. (VZ), Intuitive Surgical, Inc. (ISRG), RTX Corporation (RTX), Danaher Corporation (DHR), Lockheed Martin Corporation (LMT), Elevance Health, Inc. (ELV)

Wednesday: Phillip Morris International Inc. (PM), International Business Machines Corporation (IBM), AT&T Inc. (T), ServiceNow, Inc. (NOW), Thermo Fisher Scientific Inc. (TMO), Boston Scientific Corporation (BSX), NextEra Energy, Inc. (NEE), Texas Instruments Incorporated (TXN), The Boeing Company (BA), CME Group Inc. (CME)

Thursday: Alphabet Inc. (GOOG/GOOGL), The Proctor & Gamble Company (PG), T-Mobile US, Inc. (TMUS), Merck & Co., Inc. (MRK), PepsiCo, Inc. (PEP), Union Pacific Corporation (UNP), Gilead Sciences, Inc. (GLD), Comcast Corporation (CMCSA), Fiserv, Inc. (FI), Bristol Myers Squibb Company (BMY)

Friday: AbbVie Inc. (ABBV)

^{Source: Zacks, April 17, 2025. Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

"Alone we can do so little; together we can do so much."

– Helen Keller

The Small Business Health Care Tax Credit

The IRS introduced the small business healthcare tax credit in an effort to extend healthcare benefits. This credit may benefit employers with fewer than 25 full-time equivalent employees, offer a qualified health plan through a Small Business Health Options Marketplace, and pay at least 50% of the employee-only health care coverage cost. There may also be some average wage requirements.

The maximum credit covers:

• 50% of premiums paid for small business employers
• 35% of premiums paid for small tax-exempt employers

The credit may also be available for two consecutive taxable years.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional. 

Tip adapted from IRS⁸

Games to Exercise Your Brain

Brain training is a great way to keep your mind sharp, and these fun games are designed for people of all ages. Improve your mental fitness with games like:

• Sudoku - This strategy game requires you to find the correct order of numbers 1-9 in a 3x3 grid. There can only be one of each number in each row and column.
• Crossword Puzzles - Find the correct word for each clue. The words intersect and share letters, so you have to make sure you have the right word otherwise the puzzle won’t fit!
• Peak - A brain training app for your phone or tablet. It offers several different games designed to improve cognitive function and problem-solving. 

Tip adapted from Very Well Mind⁹

What 10-letter word (in English) can you type using only the topmost row of letters on a computer keyboard (the Q-P row)? Hint: the first two letters of the word are next to each other in the Q-P row.

Last week’s riddle: I have a horn and am almost as large as a car, but I will never honk my horn or outrun a car or truck. What might I be?
Answer: A rhinoceros.

Hassan II Mosque
Casablanca, Morocco 

Footnotes and Sources

^{1. The Wall Street Journal, April 17, 2025}

^{2. Investing.com, April 17, 2025}

^{3. CNBC.com, April 15, 2025}

^{4. CNBC.com, April 16, 2025}

^{5. WSJ.com, April 17, 2025}

^{6. CNBC.com, April 16, 2025}

^{7. CNBC.com, April 4, 2025} 

^{8. IRS.gov, September 30, 2024}

^{9. Very Well Mind, December 12, 2024}